The decision to become a mortgage broker is exciting but can also bring with it some uncertainty, leaving many aspiring brokers wondering what tools they need to find their feet in the industry. To ease these concerns, The Adviser speaks to a range of industry leaders and educators to find out what new brokers need to equip themselves with to flourish in the profession.
AS THE mortgage broking industry goes from strength to strength, it is increasingly attracting new entrants from all walks of life. The Finance Brokers Association of Australia (FBAA) says it welcomed over 1,500 new-to-industry brokers nationwide last year, and the Mortgage & Finance Association of Australia (MFAA) on-boarded 745 in NSW alone. Further, the CEO of professional education and training body Kaplan Professional, Brian Knight, revealed that the registered training organisation witnessed a 20 per cent year-on-year increase in demand for its broking courses in 2016, “which shows it’s a real career option for people”.
Getting the right education
For those looking to become mortgage brokers, the minimum education requirement is a Certificate IV in Finance and Mortgage Broking, however, some professional bodies require brokers to hold a Diploma of Finance and Mortgage Broking Management.
Once qualified, brokers must obtain an Australian Credit License through ASIC, or alternatively become a credit representative, if they do not have two years of experience in finance.
Choosing an aggregator
A fundamental aspect of getting started in the industry is choosing an aggregator, an organisation that can provide brokers with ongoing support, guidance and training. The MFAA’s NSW/ACT business development manager Zarko Jokic emphasises that aggregators can provide new brokers with direction and a plan for success when entering the industry.
“Aggregators are such an important part of this process, and an important part of this industry,” he says.
“They provide compliance, technology, and commissions. That’s a given, those three things, but really the fourth one — and the reason for choosing one aggregator over the other — is the type of business you want to write, and also the level of support you want, and what you want support in.”
The importance of a good mentor
Both the MFAA and FBAA emphasise that, for those starting out in the industry for the first time, a solid mentor is a particularly helpful source of support and knowledge.
The MFAA’s Mr Jokic emphasises that mentors provide new brokers with much more than technical support around how to structure loans and applications.
“It’s not just technical, it’s the holistic thing of how to run a business. How to generate reliable and repeatable leads. How to deal with all the aspects of running a business in 2017. How to convert leads to interviews… approval to settlement, how to work that conversion and how to make sure that you maintain your clients for longer,” he says.
To get the most out of your relationship with your mentor, Mr Jokic says it’s critical to be very transparent and forthcoming about what you need help with.
“Don’t let pride get in the way of writing down things you generally need help with. Challenge your mentor and ask them how they’re going to take you on the journey. What do the first three months look like? What do the following 18 months look like? Because what you want the mentor to bring to the table is a road map of how you’re going to develop.”
But, the FBAA’s Mr White advises new brokers to ensure that they don’t commit to paying thousands of dollars a month for a mentor.
“There are far, far better options than that sort of profiteering in the marketplace. Some structures like that are OK, but they need to be very closely investigated because at the end of the day, mentoring is all about seeing people give back to the industry and helping new people come through into our sector and into our industry.”
Build Invest Grow’s Nelson Bedoya, a new-to-industry mortgage broker with Loan Market, says that it’s generally a good idea for new brokers to seek out established colleagues in the industry and ‘pick their brain’.
“Have a chat to them about what their day looks like, what are some of the things that they have come across, or what were some of the challenges they had?”
Building professional and client relationships
For Mr Bedoya, though, one of the most important ingredients for success in the broking industry is establishing and maintaining relationships. He recommends that new brokers start with their own inner circle when building a professional network: “You’d be surprised [to find] that you [might] have a friend who has a friend who is a real estate agent, or you have a friend who is a solicitor. There’s no better way to kick-start a relationship than having been referred to someone by word of mouth.
“Start your relationships from within, and that will lead you to open doors with friends or family or whoever it is that you want to start a relationship with to build that network.”
Once the groundwork is laid, brokers are ready to start work. But, new brokers should be aware that the broking industry can sometimes look easier than it is.
Indeed, the FBAA has previously told The‑Adviser that around half of their new-to-industry members don’t make it through the first 18 months of business.
According to Mr White, a big barrier for many new brokers is supporting themselves while they find their feet.
Speaking to The Adviser last year, Mr White said: “The challenge in the marketplace is that it’s a commission-based role. Anybody entering the industry for the first time needs to ensure that they have some sort of capital backing behind them to support them through their first three, six, nine months whilst things get up and‑running.
“They have to outlay money on things like costs of licensing and registrations, equipment and motor vehicles, petrol, mobile phones and laptops, and all that sort of stuff you need to get yourself‑going.”
He added: “You can’t walk into this industry with empty pockets. So, whether you’ve got family backing or personal asset backing, you need to have something to make it work.”
The MFAA’s Mr Jokic agrees, highlighting that one of the biggest mistakes that new brokers make is having unrealistic expectations of the amount of hard work they have to put in during their first year of broking.
“They think, well I’ve gone from earning X amount of money, and now I’m earning a fraction of that but I’m working twice as hard,” Mr Jokic says. “That can kill your enthusiasm, and take all of the oxygen out of the business and you stop working as hard as you do.
“I also think that sometimes people take the easy way out and don’t put in the hard yards early on to build a solid foundation in terms of their lender relationships and making sure that they do know what they need to know about the various lenders on their panel,” Mr Jokic elaborates.
Further, Mr Jokic says that one of the biggest mistakes he sees new brokers make is not working hard enough to become proficient in marketing.
“Generating leads is where it begins and ends… You’ve got to have people who are engaging with you,” he says. “Marketing creates customers and customers create sales. But people aren’t prepared for how much work it takes to generate leads and how much marketing it requires.”
The FBAA’s Peter White adds: “It’s all well and good to come to the industry but somehow you’ve got to get leads and convert those into loans,” he says.
“Anybody coming into the industry needs to have a well-rounded business plan, and an understanding of how it is that they’re actually going to generate business.
“Are you going to do your own sort of marketing through digital media? Do you have a social group or a community group that you can network through? If you don’t have a means to generate business you don’t have a business,” he says.
Mr Jokic concludes that if brokers fully commit and plan to be successful, they can be. He says: “Plan for the massive commitment in the first year, plan to work longer than you’ve ever worked before. Plan to be rejected sometimes, plan to be frustrated, but also plan to be rewarded. This is a great industry, because you genuinely change people’s lives.”
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